Patties Foods (PFL) shares hardly moved yesterday after the company revealed it was exiting its frozen berries and pies business.
The company told the ASX that it was selling its Creative Gourmet business and removing the berries range from its Nanna’s brand.
The buyer of the business (which Patties had owned since 2007) is Entyce Food Ingredients of Melbourne, a food flavourings and products group, is buying the market leader in the segment.
Patties Foods dipped 0.4% to $1.115 cents on the ASX yesterday.
PFL 1Y – Patties ditches berries after Hepatitis scare
While the purchase price was not disclosed, Patties said the proceeds from the sale would generate $1.8 million but have an “immaterial profit effect on the fiscal 2016 result”.
Patties Foods chairman Mark Smith said in a statement that the sale of Creative Gourmet was part of its “new strategic road map where the listed company would focus on its core savoury and pastry business which represents 90% of the company’s sales and pre tax earnings".
The company will exit the category completely with Patties also revealing it would stage a planned exit of Nanna’s frozen fruit products sold in supermarkets and the Chef’s Pride food service brand of frozen fruit products sold through distributors.
The Nanna’s brand will continue to focus on its core sweet dessert pastry and apple pie products.
Patties Foods was dragged into a nationwide food scare at Easter when its Creative Gourmet and Nanna’s frozen berries products were linked to a national outbreak of Hepatitis A. All the products had to be recalled. The common link was Patties Foods’ frozen berries.
The outbreak damaged the credibility of Nanna’s and Creative Gourmet brands and saw the frozen berries category collapse in terms of sales and profitability.
Now the damage has seen the company, which is better known for its meat pies, decide to abandon the segment completely and return to its core products.
